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Beneficiaries, supervision of trustees powers of the court, trust, Trustees, Trusts, Trusts Act 2019, Variation

Sensible outcome – inexplicable decisions

O’Dea v Rutten serves as reminder of the importance of respecting the legal framework of estates and trusts.

For reasons that make no legal sense notwithstanding wills that provided for the residue of two estates to be distributed to trusts, the executors took the position that the trusts should be wound up and the trust funds paid to the settlors’ respective estates.

As noted by Associate Judge Johnston at [7]:

Although the executors were eventually persuaded that the position they had taken was untenable, by that stage the estate funds had been paid to the executors. The approach taken by the Court was practical and essentially brokered a compromise so that the grandchildren who were independently advised received the funds held in the trusts (their parents having retained the estate funds that should have been distributed to the trusts).

With respect to the advice given the Court noted that:

The Court then went on to say:

Essentially the Court sanctioned the use of the rule in Saunders v Vautier to remedy the breach (although it is observed that while the Court respected the pragmatic outcome there was a mix of dismay and despair regarding the events that lead to the proceedings).

It is useful to note that notwithstanding the statutory form of the rule in Saunders v Vautier provided in the Trusts Act 2019, the rule continues outside the legislation.

References:

  • O’Dea v Rutten [2021] NZHC 2407
  • Saunders v Vautier (1841) 4 Beav 115, 49 ER 282
  • Trusts Act 2019

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